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Packer takes stake in Trade Me

Clare Kermond

A MOVE by Packer-controlled Ellerston Capital to buy into online auction site Trade Me is part of a growing trend among private equity and traditional media to boost their presence in online transaction sites.

Analysts said Ellerston's move was a sound strategy that built on recent purchases by the fund manager in the online space.

Ellerston Capital, a fund manager controlled by James Packer's family interests, now owns 5.18 per cent of Trade Me, according to a substantial security holder notice to the New Zealand Stock Exchange.

Trade Me is not Ellerston's first venture into online transaction businesses; the fund manager acquired a 30 per cent stake in DealsDirect last year.

Mr Packer also acquired direct exposure to the sector last year via Consolidated Press Holdings, taking substantial stakes in rival deal sites Scoopon.com.au and Catch of the Day for about $80 million.

Megan Brownlow, of PricewaterhouseCoopers, said a proven online transactional business such as Trade Me offered an appealing opportunity to build investment in digital. ''These kind of purchases are not ego purchases, they are usually based on pretty robust due diligence,'' she said.

Trade Me went public last December when Fairfax Media - owner of The Age - sold down its holding to raise funds to support its publishing operations.

James Packer's investments include shares in various gaming and entertainment groups, including Melbourne's Crown Entertainment Complex, Macau's City of Dreams, Seven Network and Foxtel.

Fairfax Media bought Trade Me for $NZ750 million in 2006. It reduced its stake via last year's initial public offering and in June sold down its holding in the Wellington-based company by 15 per cent at a discounted price of $A2.70 a share. That leaves 51 per cent of Trade Me's stock in Fairfax hands.